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Tuesday, January 4, 2011

PLUS connection in MK Land's sale of land

It was a simple land sale but MK Land Holdings Bhd's deal raised eyebrows because the buyer shares the same set of shareholders for another major deal - the RM26 billion bid to take over PLUS Expressways Bhd.

MK Land announced yesterday that little-known Foster Estate Sdn Bhd plans to buy two pieces of land in Damansara Perdana, Selangor, for a combined RM130 million.

According to the Companies Commission of Malaysia, Sumami Kiman and Saharuddin Abdullah hold one share each in the RM2 company.

These two were also the same shareholders of Jelas Ulung Sdn Bhd, which is making the bid to buy PLUS.

Jelas Ulung was also rumoured to be the vehicle for Tan Sri Halim Saad although this was denied by people close to the businessman.

Foster Estate was set up on November 4 2010 and is based in Klang. Its core activity is property investment.

According to MK Land chief operating officer Lau Shu Chuan, proceeds from the land sale will be used to carry out existing projects and new ones over two years.

The deal is due to be completed by the end of this year. In a statement to Bursa Malaysia, MK Land said it has no immediate plan to develop the land.

MK Land is selling two parcels of land in Damansara Perdana, comprising 7.4ha and 3.3ha for RM100.8 million and RM29.2 million, respectively.

The developer had bought the land in April 2000 for RM5.9 million and RM2.4 million, respectively.

Damansara Perdana sits next to the thriving Kota Damansara township and it is also close to the new planned development of the Rubber Research Institute Land in Sungai Buloh.

By Business Times

Property and other loans growth poised to slow down

PETALING JAYA: Loans growth is poised to slow down as lending indicators are showing signs of moderation in credit expansion, said analysts.

ECM Libra Investment Research expects household loans growth to slow down as property sales cool down amid credit tightening and policy measures to curb excessive speculative activities.

In a report issued yesterday, ECM Libra said the loans growth momentum could be curbed by slow deposit growth which has continued to lag credit expansion at 6.5% year-to-date or 7% on an annualised basis.

Despite slower growth rates, leading loans indicators remain at comfortable levels considering that absolute levels of loan applications and approvals stayed close to peak levels. Its calendarised loans growth forecasts is 8.4% for this year and 10.9% for last year, according to AmResearch Sdn Bhd's report yesterday.

AmResearch added that net interest margins might see less pressure with the average lending rate stabilising.

OSK Research Sdn Bhd said in a report yesterday that this year's loans growth would remain robust as the rise in interest rates from record lows was unlikely to dampen pent-up credit demand spurred by a recovering economy.

AmResearch said the slowdown in the residential loans segment was positive, considering that household debts had risen significantly over the past one year.

“The future (loans) growth will likely be driven partly by execution of projects under the government's Economic Transformation Programme (ETP),” it added.

While the ETP implementation will be predominantly financed by the private sector and result in higher business loans growth, ECM Libra said it was cautious on the prospect of project implementation delay at this juncture.

The banking industry saw an overall loans growth of 13.2% year-on-year (y-o-y) in November 2010 due to business and household sector loans expansion as compared with the 12.4% y-o-y loans growth seen in October 2010.

“This growth has surpassed the previous high of 12.9% y-o-y growth almost two years earlier in December 2008. The peak before this would be the 14.9% growth in April 1998. Thus, industry loans growth is now at the highest level since the Asian financial crisis,” said AmResearch.

However, slower growth was seen in leading indicators. Loans applications, approvals and disbursements all expanded slower on a y-o-y basis for November 2010 at 13.2%, 4.7% and 0.7% against October's 20.8%, 21.4% and 11.8% respectively.

Despite the slower loans growth, AmResearch said the absolute amount of loans applied of RM56bil was still close to peak levels compared with the monthly average of RM43.4bil for 2009.

It added that the muted increase in loans approved in November 2010 was not a major concern, as it came mainly from a 74.5% y-o-y drop in other purpose segment (which included lumpy loans approved to the public sector).

OSK Research said that loans applications dipped as applications for the business and household sectors trended lower. It added that weaker demand for construction and purchases of fixed assets other than land and buildings led to slower business applications.

“Loans applications for the household sector declined, mainly due to slowing growth in the purchase of residential property,” said OSK Research.

Loans approval growth slowed due to weaker growth in the business sector with loans approvals for the purchase of fixed assets other than land and buildings being the major drag while loans approvals for the household sector moderated, it added.

Meanwhile, ECM Libra said competition in the mortgage market had resulted in widening negative spread over the base lending rate (BLR).

“This is likely the cause for the fall in average lending rate (ALR) to 4.99% despite average BLR remaining unchanged at 6.27%. Interest margin is under pressure as the ALR-3 month fixed deposit spread has fallen to 2.25%, the lowest level in 12 years,” it added.

However, momentum in merger and acquisition activities is expected to be sustained, which would underpin non-interest income growth. CIMB Group Holdings Bhd would be the main beneficiary, said ECM Libra.

By The Star

Singapore home prices rise but pace slows

SINGAPORE: Home prices in Singapore rose to record highs in the fourth quarter but the pace of increase declined, government data showed yesterday, suggesting authorities may hold off introducing new measures to cool the housing market.

The Urban Redevelopment Authority's flash estimate showed private home prices rose 2.7 per cent in the last three months of 2010 compared with the preceding period, down from an increase of 2.9 per cent in the third quarter.

"The pace of growth has slowed for the fifth consecutive quarter... This should give comfort that the recent government property cooling measures, as well as the ramped-up state land supply, have worked to some extent to contain price growth," said Tay Huey Ing, director of research and advisory at Colliers in Singapore.

Tan predicts private home prices in Singapore will rise by around 10 per cent this year, down from the 17.6 per cent increase in 2010, as low interest rates will continue to drive demand for residential property.

A separate index by the Housing Development Board indicated prices of government-built apartments that were sold gained 2.4 percent in the fourth quarter after rising 4 per cent in the preceding period.

Meanwhile, the Ministry of Trade and Industry said Singapore's economy grew 12.5 per cent in the fourth quarter of 2010, a record year in which the city state was Asia's strongest economic performer,

Singapore grew 14.7 per cent for the year as a whole, the figures confirmed, bounding back from a 1.3 per cent contraction in 2009.

Last year's growth was Singapore's best ever economic performance, surpassing the previous record of 13.8 per cent set in 1970 and within the government's projected range of 13-15 per cent.

By Business Times

MRCB-IJM Land merger aborted ‘over CEO choice’

PETALING JAYA: The inability of Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd to come to an agreement over who will lead the new entity is the cause of the merger between the two property firms being called off.

A source confirmed this to StarBiz yesterday following both companies' announcements to Bursa Malaysia last Thursday that the merger was aborted as they were unable to reach an agreement on the definitive terms and conditions of the proposed merger, following a series of discussions.

“The breakdown in talks is purely management related essentialy on the leadership of the new entity,” the source said.

He said there was a difference in opinion on whether MRCB chief executive officer (CEO) Mohamed Razeek Hussain or IJM Land CEO-cum-managing director Datuk Soam Heng Choon should lead the new entity.

“No one could agree on this fundamental issue,” he said.

According to sources, the Employees Provident Fund (EPF) abstained from the discussion due to the fund's stakes in IJM Corp Bhd (16.91% single-largest shareholder), IJM Land (5.77%) and MRCB (41.95%).

IJM Corp held a 62.76% stake in IJM Land.

Shares of IJM Corp, IJM Land and MRCB fell yesterday at the opening after being requoted following their suspension at midday last Thursday.

At the close, IJM Land fell 9 sen to RM2.77, IJM Corp dropped five sen to RM6.18 while MRCB added one sen to RM2.

It was understood that the newco would have stood a better chance at getting major portions of the EPF-led development of the 3,300-acre freehold land owned by the Rubber Research Institute in Sungai Buloh, one of the major projects under the Economic Transformation Programme.

MRCB is currently assisting the fund to masterplan the project and, notwithstanding the deal falling through, should still get portions of the project.

HwangDBS Vickers Research Sdn Bhd analyst Chong Tjen San observed that while it was disappointing that the deal was called off, both companies did not have much to worry about.

“All is not lost although MRCB will have lost the opportunity to leverage on IJM Land's township development expertise. However, MRCB should still be able to win the right to develop a sizable portion of the Sungai Buloh project, particularly the transport hub,” he said.

Chong said a well-run company such as IJM Land also had nothing to worry about. “Although the company stands a better chance in gaining a foothold in the Sungai Buloh project if the merger went through, they've other projects including the Light Waterfront project in Jelutong,” he said.

In fact, analysts were confident that IJM Land should weather the failed merger quite well as besides the RM5.5bil Light Waterfront project spread over 210 acres, the company was also in a 50:50 joint venture with Kumpulan Europlus Bhd to develop the 2,500-acre Canal City project near Kota Kemuning worth an estimated RM6.3bil.

By The Star

MK Land sells land for RM130m

PETALING JAYA: MK Land Holdings Bhd is selling two plots of leasehold land in Sungai Buloh, Selangor, to Foster Estate Sdn Bhd for RM130mil cash.

It told Bursa Malaysia yesterday that it had entered into sale-and-purchase agreements with Foster Estate on Dec 30, 2010 to dispose of 18.54 acres for RM100.78mil and another 8.32 acres for RM29.21mil.

MK Land said it was disposing of the two plots to unlock their value which it had no immediate plans to develop and the proposals were expected to be completed by the end of 2011.

By The Star

Hua Yang sells retail units

KUALA LUMPUR: Main-board listed Hua Yang Bhd is selling 73 retail units in its flagship commercial property, One South, Sungai Besi, to South Crest Synergy for RM105mil.

One South, an iconic landmark in Sungai Besi, is a mixed development project spread over 1.72ha and is a key revenue driver for the company.

The development represented a large chunk of RM1bil worth of projects that the group was rolling out, the company said in a statement yesterday.

By Bernama

Builders upbeat on 2011 industry outlook

The Master Builders Association Malaysia (MBAM) expects raw material prices for the construction industry to increase this year but still at a manageable level.

Its president, Kwan Foh Kwai said, the association expects the increase to be less than 10 per cent.

If raw material prices increase by more than 10 per cent, than the industry players would look at alternative sources, he told reporters after the signing of a memorandum of understanding (MoU) between MBAM and Open University Malaysia (OUM) today.

"Raw material prices have always beeen subject to market forces. There will be increase (in prices) but within a reasonable percentage," he said.

On the 2011 outlook for the industry, Kwan said the MBAM is optimistic that the year would be good for the industry, backed by the implementation of projects under the 10th Malaysia Plan (10MP) and the Economic Transformation Programme (ETP).

On the MoU, he said both parties would work together to come up with educational and training programmes for the construction industry.

He highlighted that at present, there was a critical need to replenish the pool of skilled construction manpower, as a majority of the workers in it are already ageing.

According to Kwan, it is estimated that 35.1 per cent of local construction personnel would reach the age of 50 and above, seven years from now.

"The OUM programmes are specially developed and designed for working adults. The courses developed will incorporate knowledge and entrepreneurship skills which would be industry oriented," he explained.

Among the programmes are an Executive Diploma in Construction Project Organisation and Control, an Executive Diploma in Construction Management, an Executive Diploma in Project Management, an Executive Diploma in Contract Administration, an Executive Bachelor in Construction Supervisory Management, an Executive Bachelor in Integrated Contruction Project Management and an Executive Bachelor in Contract Management and Administration.

The Vice Chancellor of OUM, Prof Emeritus Tan Sri Anuwar Ali said, the programmes are expected to start next month.

By Bernama